MONTPELIER — Top officials in the administration of Gov. Peter Shumlin have directed the heads of agencies across state government to deliver level-funded spending plans for next year.

In a recent memorandum to executive branch managers, the administration asks for fiscal year 2015 budget proposals that don’t exceed allocations for the current fiscal year.

Given contractual pay raises for state employees, the rising cost of health insurance and inflationary jumps in the cost of doing government business generally, Finance Commissioner James Reardon said Thursday the level-funding directive would require either cuts to programs or services, or cost-saving operational reforms.

“We’re going to have (increases in employee compensation) and other upward pressures in the budget,” he said. “But they’re going to have to come back with corresponding reductions in other areas in order to come back with a general fund appropriation that is equal to their fiscal year 2014 appropriation.”

Reardon said the exercise is the first step in a long budget process and that the guidance issued to agency heads won’t necessarily result in the cuts that a level-funded budget would inflict.

“This is a starting point for having budget discussions with agencies and departments,” he said. “And this may not reflect our ending point.”

But with Shumlin having made clear his refusal to raise the income, sales or other broad-based taxes next year, Reardon said, fiscal discipline will need to be rigorous.

“The governor has been very clear that he’s not going to raise broad-based taxes, so that’s one of the parameters we have to work with in developing the governor’s recommended budget that we’ll present to the Legislature in January,” Reardon said.

He said the administration is leaving it largely up to agency heads to decide where, and how severely, to reduce line items. But the budget guidance issued to managers Sept. 24 says that “preference should be given to the elimination of entire program(s) and/or service(s) rather than across-the-board reductions that jeopardize the stability and sustainability of multiple programs and/or services.”

Reardon said, “The advantage of that is if you start cutting different programs and services to the point where they aren’t running effectively, then aren’t we better off just eliminating something altogether rather than having a number of things not being run appropriately?”

The administration has asked managers to list their funding proposals in order of priority, and Reardon’s office will meet with them individually in the coming weeks to fine-tune proposals. Budget proposals are due back to the Department of Finance and Management beginning today.

While the budget guidance deals only with general fund expenditures, Reardon said department heads need to consider the prospect of reductions in federal revenue as they go about their budget planning.

According to the budget memo, state budget writers should “not assume that federal reductions will be covered with increased general funds.”

The memo says, “Rather, you should assume that these programs will not be replaced unless you can demonstrate they meet a critical state policy goal.”